Days after banning sales of the iPhone 16 in one of the largest markets in Southeast Asia, Indonesia is now banning the sale of Google Pixel devices for failing to comply with its rule of requiring 40 per cent locally sourced components. Google now needs to obtain a local content certification before resuming sales.
The Indonesian Ministry of Industry’s rule requires smartphone and tablet manufacturers to source up to 40 per cent of handset and tablet components domestically. However, the rule can be complied with in different ways including investment in projects, firmware development, or good old local manufacturing.
Apple made a 1.71 trillion rupiah ($108 million) investment commitment, which it failed to meet, prompting authorities to ban the sale of the iPhone 16 in the country. So far, the iPhone maker has invested 1.48 trillion rupiah and also operates four developer academies. However, despite pressure to expand its local presence in the country, it hasn’t set up any manufacturing facilities.
Other smartphone players are doing what they can to meet Indonesia’s requirements. Samsung and Xiaomi, for instance, have set up manufacturing facilities, while Apple decided to go the developer academy route.
The regulation is enforced with a certification system called “local content level.” It’s part of a larger attempt by the country to leverage its huge consumer market to boost domestic economic development, with companies failing to meet these requirements facing sales restrictions.
However, with neither Apple nor Google among the country’s top five phone brands, there’s still a question mark about whether they’ll follow through on the required investments. That said, the country does have a large, tech-savvy market, making it a key investment market for tech investments in Asia. Samsung, one of the country’s top two smartphone brands, has already met the requirements to keep its place intact.
Febri Hendri Antoni Arief, a spokesperson for the ministry, claims that they’re pushing these roles “so that there’s fairness for all investors in Indonesia.” However, Reuters quoted Bhima Yudhistira, director of the Center of Economic and Law Studies think tank saying that the rule “creates a negative sentiment for investors looking to enter Indonesia,” adding that the move is “pseudo” protectionism that’ll end up hurting consumers and affecting investor confidence.
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